Ayala Corp., one of the country’s largest and oldest conglomerates, said Friday it expects net income to double to P50 billion by 2020, as it seeks new businesses in automotive and manufacturing while strengthening the energy and infrastructure investments.
Ayala Corp. chairman Jaime Augusto Zobel de Ayala said during the annual stockholders’ meeting the conglomerate forged a joint venture partnership with European motorcycle producer KTM AG to manufacture motorcycles for the Philippines and for export to China and Southeast Asia.
“This partnership is the first of many investments as we ramp up our manufacturing portfolio. Over the years, we have built a long track record of excellence in manufacturing and engineering. We believe manufacturing should be a critical component for the country’s growth moving forward, providing thousands of jobs, creating ancillary business opportunities and helping five inclusive growth for the Philippines,” Zobel de Ayala said.
Under the plan, the joint venture partners will build a manufacturing facility in Laguna with a capacity of 20,000 units, of which 70 percent will be for export to China while the remaining 30 percent will be for the domestic market.
“We are delighted to have found a strong and capable Asian partner in Ayala Corp, one of the leading conglomerates in the Philippines—a country we view as a key platform, for achieving out global growth strategy,” KTM chief executive Stefan Pierer said in a statement.
“Ayala’s capabilities in manufacturing, distributorship and dealership as well as its regional expertise and excellent reputation make them the ideal strategic partner for our Ready to Race aspirations. We look forward to a long and fruitful relationship and plan to rapidly grow KTM and its brands across Asia,” Pierer said.
Aside from production and distribution of motorcyles, the partnership between KTM and Ayala also involves co-development of the next-generation motorcycles for the world market.
The 65:35 joint venture partner in favor of Ayala Corp. will have an initial capitalization of $2 million, while at least P500 million will be invested to build the manufacturing plant.
The conglomerate said the venture into motorcycle manufacturing was a part an overall plan to eventually go into automotive manufacturing.
Aside from venturing into automotive and manufacturing businesses, Zobel de Ayala said the group under a newly drafted five-year plan aimed to achieve the P50-billion net income target by expanding the earnings contribution of other businesses outside four largest units, namely Ayala Land, Globe Telecom, Bank of the Philippine Islands and Manila Water Co. Inc., to 20 percent from four percent at present.
It also aims to expand the group’s presence in Southeast to 10 percent of equity earnings by 2020.
Ayala Corp. aims to improve shareholder return on common equity to 15 percent.
The conglomerate has recently expanded in transport and power sectors and ventured into healthcare and eduction businesses.
The group expects to have 1,000 megawatts of attributable capacity this year.